TRENTON — A state Senate committee approved a bill Thursday aimed at reversing 10 years of declining bus traffic to Atlantic City by exempting bus operators from a tax.

Two southern New Jersey lawmakers introduced the bill, which would exempt out-of-state bus operators from New Jersey’s corporate business tax. The lawmakers said the tax, implemented in 2001, has led to a 40 percent drop in bus traffic to Atlantic City in a decade.

Sen. Jeff Van Drew, D-Cape May, Cumberland, Atlantic, and Sen. Jim Whelan, D-Atlantic, the bill’s sponsors, said their effort to reverse that downturn makes sense as the state tries new efforts to revive the resort.

The corporate business tax exacts 9 percent of businesses’ taxable income. The same rate applies to revenue generated by out-of-state companies that conduct business in New Jersey.

Since the tax was instituted, dozens of bus operators, many based in Virginia or Florida, have stopped or threatened to stop scheduling trips to Atlantic City.

Van Drew argued Thursday that the bus companies presented a special case because the operators only use the state’s roadways as they bring visitors who spend significant money in the casinos or at other hotels and attractions.

 “These companies are just coming in and dropping groups off,” Van Drew said. “We think the tax has been a deterrent, and that has only grown worse as neighboring states have started competing with us by introducing gaming. Now they say they don’t come to New Jersey at all.”

Others echoed the need to capture any and all tourism interest in Atlantic City.

“Let’s not suppress people who want to be here,” said Peter Elco, director of intergovernmental relations for the Atlantic City Convention & Visitors Authority. “This change would be major for the resort.”

Elco testified before members of the Senate Budget and Appropriations Committee, which approved the bill 13-0, that bus traffic to the resort had dropped by 40 percent in the 10 years since the tax was implemented, costing the city about $2,000 per day in revenue.

Lawmakers from other districts asked whether the state could afford to lose any tax revenue. But Senate Majority Leader Barbara Buono, D-Middlesex, one of the committee members, said she was confident by the end of the meeting that the tax revenue lost by exempting bus operators would be negligible.

On that point, the bill states, “The loss of tax revenues resulting from this bill will be offset by the sales and use tax and the casino revenue tax generated by tour bus visitors that spend money in this state.”

Clyde Hart, a senior vice president of the American Bus Association, applauded the bill, which now moves to the full Senate for a vote. An Assembly version awaits an Appropriations Committee hearing.

“We’ve got companies who come to us and tell us, ‘Hey, with New Jersey taxing us and neighboring states not doing that, we’re not running to New Jersey.’ They want to, but they won’t,” he said.

Contact Juliet Fletcher:

609-292-4935